Time Warner: Despite Ratings Drop, Viewership Holds

Time Warner CFO John Martin said
Monday that despite ratings erosion with the broadcast networks, the company has no “serious concern” about a trend of declining TV consumption and a resulting impact on the ad market.

“Advertisers are continuing to seek high-production-quality video,” he said at an investor event. “And if you look at the two real areas in media where
advertising is growing, it’s in television and the Internet. A lot of the growth in the Internet is due to better and more high-profile video moving online.”

He added that
viewership should also remain robust as more multiplatform viewing options emerge.

Time Warner owns 50% of the CW network, while its TV studio is a major supplier of shows to the
leading broadcast networks.

Martin said the company doesn’t feel Netflix is contributing to ratings drops, citing statistics that in the fourth quarter, Netflix accounted for an
estimated 3% of all viewing, up from 2% the year before even with notable subscriber growth. Time Warner has a new deal with Netflix, giving the streaming service rights to multiple TV series from
Warner Bros.

As for growth opportunities, Martin said the company is pointing to affiliate-fee growth for its Turner and HBO networks, which account for 30% of overall revenues ($8.5
billion-plus a year). All affiliate deals will expire between the middle of 2013 and the end of 2016, and he said the company is aiming to “monetize” its investments in programming with
“aggressive” negotiations.

As for the current ad market, Martin said it is “very steady” and “healthy,” notably with sports in high demand,
including sales for March Madness already.